Far EasTone counting on value-added services

ANNUAL FORECAST:The company released a statement outlining its expectations after officials held a conference call with investors to report on fourth-quarter results

By Kevin Chen / Staff reporter

Far EasTone Telecommunications Co (遠傳電信) yesterday said it expected higher revenue and earnings this year than last year on growth in mobile value-added services and handset sales.

It also said it would raise capital expenditure by more than 20 percent to upgrade services.

The Taipei-based company’s consolidated earnings before income tax, depreciation and amortization (EBITDA) this year is expected to grow 5.09 percent year-on-year to NT$25.599 billion (US$863.7 million) from NT$24.36 billion last year.

Net profit is forecast to reach NT$11.41 billion, up 7.64 percent from last year’s NT$10.6 billion, with earnings per share of NT$3.5, compared with NT$3.25 last year, the nation’s No. 3 telecoms operator said in a statement released after a conference call with investors where it reported its fourth-quarter results.

In the statement, Far EasTone said it had beaten its financial guidance set last year in terms of revenue and net profit, while pledging to maintain a 100 percent dividend payout ratio on last year’s results.

However, the company’s latest guidance seems to suggest its growth pace in profitability will slow this year, as the projected 5.09 percent annual increase in EBITDA and the 7.64 percent yearly growth in net profit for this year are both lower than the increases of 8.4 percent and 19.4 percent recorded last year respectively.

Far EasTone predicted its consolidated sales would likely reach NT$89.67 billion this year, up 3.4 percent from NT$86.75 billion last year, which is also weaker than the 14.5 percent increase it saw last year from 2011, when it reported total sales of NT$75.75 billion, according to the statement and the company’s financial data.

Prospects for 2013:

‧ A 5.09 percent growth in EBITDA.

‧ A 7.64 percent rise in net profit.

‧ A 3.4 percent increase in consolidated sales.

The company said it planned to allocate NT$10.5 billion for capital expenditure this year to upgrade its services, accounting for 11.8 percent of its total revenue.

The planned spending for this year was 20.69 percent higher than last year’s expenditure of NT$8.7 billion, the company’s data showed.

Far EasTone shares closed 0.27 percent lower at NT$73.7 on Wednesday, the final day of trading on the local stock market before it closed for the Lunar New Year holiday. The market reopens on Feb. 18.

Far EasTone’s stock has risen 28.85 percent over the past 12 months, compared with an increase of 2.58 percent on the TAIEX over the same period, according to Taiwan Stock Exchange data.